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A Think Tank With One Idea: The Newt World Order

July 02, 1995

Government: CORPORATE CLOUT

A THINK TANK WITH ONE IDEA: THE NEWT WORLD ORDER

Ideas may indeed move armies. But not that easily in Washington, where think tanks are as common as coffee bars. Just getting heard is a victory, when you're competing with well-heeled fonts of wisdom such as the Brookings Institution, the American Enterprise Institute, and the Heritage Foundation.

But as quick as you can say "Newt Gingrich," the upstart Progress & Freedom Foundation has bullied its way onto center stage--and is being heard. Flush with corporate cash, it's pumping out policy prescriptions for dumping the Federal Communications Commission, axing federal block grants, and privatizing safety and efficacy reviews of prescription drugs and medical devices.

There's no trick to PFF's success: It has benefited mightily from a cozy relationship with the Republican House Speaker, and access-hungry corporations are giving generously. Critics decry the group as a tax-exempt arm of Gingrich's political empire. And academic rivals dismiss its intellectual firepower. Still, Newt's favorite think tank is attracting cash and status. "There's no doubt we feed off the phenomenon," say 37-year-old Jeffrey A. Eisenach, PFF president. "And we feed the phenomenon."

Eisenach is a case in point. Last year, he was just another obscure Beltway policy wonk. Formerly executive director of a political action committee headed by Gingrich, GOPAC, Eisenach was selling a Third Wave conservatism that many dismissed as flaky. But when November's election catapulted Gingrich to power, PFF became the darling think-tank of the Republican Revolution.

Since the election, times have been good. Revenues are expected to hit $6 million in 1995, putting PFF on the same financial footing as seasoned groups such as the libertarian-leaning Cato Institute. For fiscal 1994, which ended Mar. 31, 1995, PFF raised $2.2 million, up from $656,000 in 1993. And in the first three months of 1995 alone, it took in $866,000, with $650,000 in contributions mostly from large corporate sponsors.

It's not just the fattened coffers that prove PFF's momentum. Lawmakers have pored over three foundation policy papers released since May, and its budget recommendation, called The People's Budget, is sold in bookstores. By yearend, PFF plans to publish four additional books by Gingrich favorites such as Marvin Olasky, author of The Tragedy of American Compassion, and New Age philosopher Arianna Huffington. Sales of books and videotapes soon will make up 15% of revenues.

The group's intellectual focus is the future: Unlike conservative groups that endlessly critique failed federal programs, PFF wants to ax those systems and create institutions for the Information Age. Its prescription for saving America's inner cities, for example, is to jettison welfare and replace it with a private-sector model where nonprofit groups and businesses would coordinate urban economic development aimed at putting poor people to work.

NO HEAVYWEIGHTS. The early scholarly work at PFF, however, rarely diverges from the Gingrich party line. While some academics credit it for tackling long-term problems, others say the group lacks the intellectual depth of established organizations. For example, former Minnesota Congressman Vin Weber--a long-time Gingrich pal--is a senior fellow writing about politics. "They don't have any heavyweight intellectuals on board right now," says Robert W. Crandall, a senior fellow at Brookings.

Meanwhile, PFF is caught in a political firestorm. Some Democrats charge that the group is a way for business and wealthy individuals to evade campaign- finance law donation limits while funneling more money to Gingrich. Charges Representative David E. Bonior (D-Mich.): "That think tank was put together to take care of Newt."

Indeed, PFF appears to have almost single-mindedly promoted the Speaker. During its first 20 months, roughly 43% of the group's $1.4 million budget went to funding Gingrich's televised college lecture series, Renewing American Civilization, and his cable television show, Progress Report.

In addition, Eisenach spent several months in the offices of GOPAC while launching PFF. Much of that time was spent organizing Gingrich's college course, which critics denounce as political rather than academic. "The error Gingrich made is to mistake education for indoctrination," says Robert Dawidoff, chairman of the history department at the Claremont Graduate School in California. The House ethics committee is probing whether Gingrich broke any rules by using nonprofit money to fund political activities.

The Speaker has been careful to distance himself from the group. He doesn't serve on its board, nor is he on its payroll. "I haven't even met with their directors," Gingrich told BUSINESS WEEK. In a December, 1993, Progress & Freedom newsletter, however, Eisenach wrote that the idea for the foundation emerged from "a series of conversations with my friend Newt Gingrich." But Gingrich aide Tony Blankley says that doesn't mean Eisenach or Gingrich have acted improperly. "Gingrich has lots of operations. But there are lines between them, and he's carefully advised about where those are. If Bonior thinks the lines are blurred, that's his problem."

Nonetheless, the Newt connection has lured policy wonks of all stripes as advisers to PFF. Former Health and Human Services Dept. Secretary Louis W. Sullivan, for one, chairs its medical innovation project. Such recruits see a rare chance to shape policy. "We're getting the ear of people on Capitol Hill who really matter," says American Enterprise Institute scholar J. Gregory Sidak, who worked as an adviser on PFF's FCC study.

Business is willing to pay for that kind of access, too. "There's no doubt Newt helps with fund-raising," says C. Boyden Gray, White House counsel to President Bush. Donations overwhelmingly came from companies in telecommunications and medicine, areas where PFF is crafting bold deregulation plans. Corporate donors include AT&T, Bell Atlantic, Bristol-Myers Squibb, Coca-Cola, Eli Lilly, and Marion Merrell Dow. The average gift was $15,800--far more than the $5,000 political action committee limit permitted by law to go to the Gingrich campaign. "We recognized that Progress & Freedom had important links to the new Congressional leadership," says Lisa J. Raines, lobbyist for Cambridge (Mass.) drugmaker Genzyme Corp. "It's important to participate in their deliberations."

SAFE NICHE. In some areas, business already is getting its money's worth. On May 30, the foundation released a study proposing to ax the FCC and replace it with a far smaller White House office. In addition, PFF proposed selling all unassigned radio spectrum to the private sector. After working with Representative Jack Fields (R-Tex.), chairman of the House subcommittee that oversees the FCC, PFF staffers expect legislation based on their research this summer. Says Fields: "The study was excellent. It really framed a lot of issues for us."

Still, the real test of a young think tank is how it performs when its reason for creation fades. The Heritage Foundation, for one, has managed to thrive in post-Reagan Washington by carving out a conservative niche that often tweaked George Bush. But if Gingrich vanished overnight, even Eisenach admits that PFF's voice would dim quickly. That's not a ringing endorsement for a think tank, especially when being heard is half the battle.

Newtonian Logic

The Progress & Freedom Foundation's stands on policy issues:

BUDGET Proposes slashing federal government spending to 15.7% of GDP by 2002, compared with 21.8% today. Advocates ending block grants for social programs after 2000.

TELECOMMUNICATIONS Recommends replacing the Federal Communications Commission by late 1996, with a smaller office.

URBAN RENEWAL Plans to launch an urban demonstration project in Washington this summer, where government assistance would be replaced by business and nonprofit support.By Mary Beth Regan, with Richard S. Dunham, in Washington